Construction ramping up for CD-5 oil project

Alpine is the staging area for ConocoPhillips’ construction of its CD-5 project six miles west of the field, and a lot of activity there will be ramping up after the start of the new year.

The company is also adding new drill rigs to the Kuparuk River field, where it is operator.

“These are exciting times. My business unit is in a full-hiring mode,” said ConocoPhillips Vice President for Development Nick Olds,.

Olds outlined several projects ConocoPhillips is working on for the Alaska Support Industry Alliance Dec. 12. He gave full credit to the state of Alaska for enacting a revamped state petroleum tax last April in Senate Bill 21.

CD-5 is a billion-dollar new oil production site that has been long-planned by ConocoPhillips and its partner, Anadarko Petroleum Co. that was underway before the passage of the tax change.

However, several other projects that total about $4.5 billion in new investment have been announced by North Slope producers BP and ConocoPhillips since the passage of the tax reform.

Meanwhile, the building of new camps and deliveries of material for CD-5 have been accomplished, Olds said. Ice road construction to allow crews to reach the construction sites is now underway, he said.

As soon as the ice roads are complete, which is expected in January, contractors will begin moving gravel for six miles of new road and materials for four bridges, including a 1,400-foot span across the Niqlik channel of the Colville River, he said.

Three of the smaller bridges and six miles of road to the CD-5 pad will be built this winter along with installation of piling for the long bridge span. Construction of the long span over the Niqlik Channel is planned to be completed next fall, Olds said.

Five hundred construction workers will be employed at the peak of the project.

“CD-5 is on schedule. Fabrication of the bridge materials is on schedule and we are marshalling the material on the Slope. We have 36 of 56 contracts now executed and all of the long lead-time materials and equipment are on order,” Olds told the Alliance.

Key contracts for installation of the CD-5 modules and the pipelines will be let this spring, he said. The modules are being built in fabrication plants in Anchorage and Fairbanks, he said.

CD-5 is expected to produce about 16,000 barrels per day from wells located on an 11.7-acre gravel pad. Initially there will be 15 wells including seven producer wells and eight drilled to inject water and miscible gas fluids for enhanced oil recovery.

First oil is expected in December 2015.

The facilities are being sized to support an expansion to 33 wells, Olds said. Also, six of the producer wells will involve large “multi-stage” fracturing, with procedures similar to those use in shale oil development in the Lower 48 states.

The billion-dollar cost of CD-5, for a project that will produce 16,000 barrels a day, has attracted considerable comment in the industry. Much of that cost is in the bridges, which will be expensive.

However, the bridges are also critical infrastructure that will support development of drill sites further west in the NPR-A, such as the GMT-1 project now planned by ConocoPhillips and Anadarko, Olds said.

“We’re doing a lot of ‘pre-investment’ at CD-5 in facilities like pipe capacity and Vertical Support Members (to support above-ground pipelines) that will also serve GMT-1,” Olds told the Alliance.

CD-5 is a stepping-stone to GMT-1, eight miles farther west in the NPR-A.

“GMT-1 is almost a replica of CD-5,” Olds said, with an 11.8-acre gravel pad similar to that of CD-5.

However, the expected 30,000 barrels-per-day of production will be handled by fewer wells, including three producing wells and five water and miscible gas fluid injectors.

“The wells will have higher rates,” of production than CD-5, Olds said.

GMT-1 is scheduled two years after CD-5 so as to provide a steady flow of oil through the Alpine field processing facilities, ensuring maximum efficiency.

An exploration well is also planned to be drilled this winter near GMT-1 to test for possible added oil resources that could be reached from the production site, Olds said.

Permits for GMT-1 were applied for last summer and if the project is given final approval in late 2014 construction would be underway in 2016 and 2017 with first oil in late 2017. This project would require about $900 million to develop and would require about 400 construction and construction-support positions, Olds said.

Looking farther west, ConocoPhillips sees the potential for a GMT-2, but further appraisal of the potential resources is needed before decisions can be made, he said. A second exploration well planned by the company this winter will be drilled in that area to gather more information, he said.